Northern Territory Poised for AI Data Centre Boom Amidst Environmental Concerns

From the tropics of the Top End to the red dirt of Central Australia, the Northern Territory seems a world away from the rapid development associated with artificial intelligence.

But the NT could soon be at the centre of one of the world's most controversial industries, with 12 data centres proposed for Australia's most remote jurisdiction.

Why have these companies chosen the NT and is it ready for an AI boom?

Abundant solar and gas

Jason Finlay, a partner with Vantage North Group, says the NT's sunny skies and vast reserves of natural gas are part of the attraction for AI firms.

Vantage North Group is comprised of three former senior NT public servants and counts among its clients gas companies operating in the Beetaloo basin and companies planning to build data centres.

The Beetaloo's gas would provide stable, abundant power for data centre operators, which use massive amounts of electricity.

One recent NT proposal said 1 gigawatt of constant power would be required to operate at full capacity.

That is more than three times the maximum demand of the Darwin-Katherine power system in 2024-25, which was just 294.9 megawatts, according to the NT Utilities Commission.

Solar facilities could be built to power data centres, but Mr Finlay said companies could not afford to build enough batteries to rely entirely on solar and would require "some kind of gas firming".

"I think the Northern Territory has a very unique position where we have some of the best solar irradiance in the world," Mr Finlay said.

"I'm extremely excited by the prospect of what we have here.

"It brings together such a huge number of key resources that we have, and it does it in a very unique way."

Environmental concerns

The use of natural gas has environmental groups worried and Greenpeace Australia calling for a pause on data centres until a review of legislation is completed.

Greenpeace campaigner Solaye Snider said the "frenzy" of development in Australia could derail the country's transition to renewable energy.

A recent analysis co-authored by Ms Snider claimed data centres could account for 13 per cent of total national electricity demand by 2040.

"These new hyperscale proposals just need unprecedented amounts of energy, and so they're almost always turning to gas or fossil fuels in some way," she said.

Greenpeace's report also described the amount of water used by data centres as "dizzying".

A proposed gigawatt-scale data centre in the NT's Barkly region would use up to 4 gigalitres of water each year, which is more than greater Darwin uses in a month, according to NT Power and Water Corporation data.

Meanwhile, Sydney Water — Australia's largest water utility — expects data centres to represent a quarter of Sydney’s total annual water use by 2035.

Ms Snider said a lack of "binding regulations" meant data centres powered by a blend of gas and renewables were not required to limit their gas use.

Ms Snider said laws should be introduced to ensure data centres are powered entirely with new renewable energy infrastructure.

According to Vantage North, proponents would still consider the Northern Territory an attractive place to build, even if a renewables-only mandate was in force.

The federal government is considering its options and AI is expected to feature prominently in Labor's national conference agenda this week.

The party could expand its policy platform to encourage further oversight on safety risks, copyright and managing the demand for electricity and water to power data centres.

Asian proximity

Developers have also turned to the NT as traditional commercial hubs such as Singapore tighten regulations to prevent data centres from putting pressure on the local power grid, according to Mr Finlay.

This makes Darwin an attractive prospect, as it is also close to undersea sea cables that connect Australia to South-East Asia and carry huge amounts of data and internet traffic.

"If I was going to build 5 gigawatts' worth of data centres to support a Singapore market, I can either build that in Singapore and import all the energy over there, or build it in the [NT] and transmit the data across to Singapore," Mr Finlay said.

"We don't just get one project, we end up getting a multitude of projects, and that's what makes me probably more excited than just one individual project alone."